According to a senior company executive, the money will be spent towards enhancing towel capacity and for the ongoing flooring solution project
Home textiles maker Welspun India, a part of $2.3 billion Welspun Group, will spend Rs 700 crore towards capital expenditure in this fiscal. According to a senior company executive, the money will be spent towards enhancing towel capacity and for the ongoing flooring solution project.
Altaf Jiwani, director and CFO, Welspun India, said that capacity utilisation for towels is almost at 97% now and that the board has announced an expansion of 10,000 metric tonne for towels in this fiscal. "We are also working on flooring solution vertical, so taking into account expansion for towels, routine capital requirement and Welspun flooring, we would be spending about Rs 700 crore in capex during FY'18," said Jiwani, adding that the capacity for Welspun flooring solutions project is about 7 million square metres that will require an investment of Rs 600 crore over the next 15 months and is expected to be completed by the second quarter of fiscal 2019.
On Tuesday, the company reported a 22.57% year-on-year fall in consolidated net profit at Rs 154.48 crore for the quarter ended March 31. Its total income increased 8.1% on year to Rs 1,772.71 crore during the quarter under review.
Over the last three years, Welspun India has incurred capex to the tune of Rs 2,400 crore. In the previous fiscal, it also had an exceptional item of Rs 501 crore being set aside to deal with the issues related to Egyptian cotton-based products.
As for net debt situation is concerned, the company has maintained a level at Rs 3,000 crore for the last three years. "This is considering the IndAs impact, where certain bill discounting and vendor financing gets clubbed. But if you go by the previous accounting standards the debt remains at Rs 2,500 crore for the last three years," said Jiwani.
Interestingly, despite significant capex, the company has had a positive free cash flow (FCF) for the consecutive three years. "Even this year, after incurring exception item of Rs 500 crore, we have had a positive FCF of Rs 86 crore," Jiwani said.
The company's profit after tax (after exceptional item) for the fiscal 2016-17 declined 51.5% to Rs 357.6 crore year on year. Total income for fiscal 2017 rose 12.1% to Rs 6,640.5 crore. The Welspun Board also recommended a dividend of Rs 0.65 per share.
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